Ex-U.S. Trade Official Talks TPP, Obama’s Asia Outreach

By Michael Coleman Uploaded on December 18, 2015

When the U.S. government negotiated key details of the recently completed — but yet to be ratified — Trans-Pacific Partnership (TPP) with 11 Pacific Rim nations, Wendy Cutler was at the center of the deal-making as acting deputy U.S. trade representative.

It’s not the first time Cutler has been a key negotiator on strategic regional trade deals. During her nearly three-decade tenure at the Office of the U.S. Trade Representative (USTR), she focused primarily on strengthening trade ties with Asia. She helped negotiate the 2011 U.S.-Korea Free Trade Agreement, update the U.S.-China Joint Commission on Commerce and Trade, and generally make the trade agenda of the 21-member Asia-Pacific Economic Cooperation more relevant.

After a long career in government, Cutler shifted gears in October and took over as director of the Asia Society’s Washington office while simultaneously assuming the role of vice president of the Asia Society Policy Institute, an affiliated think tank that aims to bring Asia to the forefront of global policymaking.

Photos: Elena Olivo / Asia Society

Wendy Cutler

The TPP is a key component of that vision. After years of delicate, closed-door negotiations, the sweeping trade pact that would connect about 40 percent of the world’s economy was finalized during Cutler’s final days in government, but the deal still faces months of scrutiny in Washington, where Congress must sign off on it before it can be enacted. After a bruising battle with his own Democratic Party, President Obama was able to secure so-called fast-track authority, considered a prerequisite for any trade pact, largely by relying on Republican votes. As a result, Congress can either approve the deal or vote it down but cannot amend or filibuster it.

Since fast-track authority was cleared, however, GOP support for the TPP has diminished. Pro-business Republicans have traditionally embraced free trade agreements, but even some staunch trade proponents who initially backed the TPP have criticized it for not going far enough to extend protections for the pharmaceutical and tobacco industries, among other complaints. Some Republicans have offered tepid support, while others have suggested Obama may need to reopen talks to fix certain holes, a daunting and unlikely prospect because that would involve renegotiating with all the other TPP participants.

Meanwhile, on the opposite end of the spectrum, Democrats have slammed the TPP as yet another far-reaching trade accord hammered out behind closed doors with little public scrutiny. They argue it will line the pockets of big business while costing American jobs and eroding environmental, consumer and labor standards. Liberals have found an unlikely ally in populist conservatives, who also oppose the deal on the grounds that it gives the president too much power, threatens national sovereignty and doesn’t address currency manipulation.

Presidential politics have complicated Obama’s fight to shepherd the deal through Congress in his lame-duck final year. The presumptive Democratic nominee for the White House, Hillary Clinton, opposes the TPP, even though she praised it as secretary of state. Meanwhile, Republican frontrunner Donald Trump has railed against the deal as a “disaster.” Jeb Bush and Marco Rubio have been lukewarm to it.

Supporters and detractors of the TPP will find plenty of fodder in the sprawling, 30-chapter agreement that covers everything from textiles to cars to pork to financial services. USTR estimates the deal would eliminate more than 18,000 tariffs on the imports of goods from the United States into the 11 other participating countries. That could spur business growth in the U.S., but skeptics say it would result in fewer worker and environmental protections and ship more American jobs overseas.

In the middle of the contentious debate is Obama, who has defended the TPP — the largest trade deal since the North American Free Trade Agreement — as the “highest-standard trade agreement in history.” Among other things, he points out that the deal is the first of its kind to include strong, enforceable labor provisions that allow the formation of unions and collective bargaining and address child labor; he also cites “groundbreaking” environmental provisions to curb illegal fishing and wildlife trafficking. Moreover, Obama has sought to debunk claims that the TPP would set up a system of international arbitration that would bypass national laws, saying the mechanism would promote the rule of law, not undermine it.

Above all, the administration argues that the trade pact would give American businesses a critical foothold in the fastest-growing region of the world, where market barriers remain relatively high. It encompasses some of America’s strongest allies and trading partners, including Australia, Mexico, Canada and Japan, together accounting for $1.5 trillion worth of trade in goods in 2012 and $242 billion worth of services in 2011. The White House has repeatedly said that without the TPP, U.S. businesses will be left behind and that, “If it’s not America, it’s going to be competitors like China.”

On that front, China is not a party to the deal. While Obama insists the TPP is not intended to contain China, the accord is the centerpiece of the president’s Asia pivot to rebalance economic and military resources toward a region where Beijing has increasingly flexed its muscle and to reassert America’s pre-eminence as a Pacific power.

It is a region with which Cutler is intimately familiar, having focused on strengthening trade ties with Asia for nearly three decades with USTR. “Trade negotiations have taken me to nearly every corner of Asia,” Cutler said upon joining the Asia Society. “Asia is like a second home to me.”

In a recent Diplomat interview, Cutler discussed her new job, why she thinks the controversial TPP deal is good for America and her view of Obama’s much-vaunted — and some say as-yet unrealized — pivot to Asia.

The Washington Diplomat: What do you hope to accomplish as vice president of the Asia Policy Institute, which was launched last year and is led by Kevin Rudd, a former prime minister of Australia?

Wendy Cutler:It’s a relatively new institute that was created under the Asia Society to bring the Asian perspective to Washington on pressing policy issues that are facing the Asia-Pacific region. I’m very excited about joining, and in addition to running the Washington office and raising the profile and really integrating us into the dialogue on Asian matters in Washington, I plan to focus in terms of substance on trade and women’s empowerment issues.

TWD: There seems to be a fair amount of talk in international policy circles about creating more professional opportunities for women in Asia, where society can be quite patriarchal. The women who do have power in government are often the daughters or descendants of powerful men. How can you use your new role to empower Asian women?

Cutler: One of the key challenges facing women in the workforce in Asia is the lack of role models and senior women to really look up to and to gain from their experience and learn how to advance in one’s career. I hope that through working on projects that involve mentoring and experience sharing and networking and really helping younger women develop the skills necessary to advance in the workplace that we can make a real contribution.

TWD: Now that the TPP has been finalized, what’s left to do?

Cutler: The action really moves to the capitals of the TPP countries where they need to follow their domestic procedures and get the agreement passed in their legislatures. After that, countries will need to work to get the agreement put into force. All of those discussions are going on now domestically, including in the United States.

TWD: The agreement created unusual political bedfellows. Many congressional Democrats, especially those with close ties to organized labor, opposed President Obama’s administration on the deal. But it was one of the only times in Obama’s tenure as president that most Republicans actually backed him. How did the contentious domestic climate affect the negotiations from the American perspective?

Cutler: As we negotiated we knew this agreement would be controversial and that there were opponents. That’s really true on any trade agreement I’ve worked on. There are people who see benefits to the agreement, but there are always people who have concerns and feel that somehow the agreement is going to hurt them. As negotiators we tried to advance the national interest and try to make sure that people benefitted from the agreement. As our Congress considers this agreement, I’m confident that when they look at the whole of it and they look at all the areas where gains are made, they will come to the conclusion that the gains will outweigh any concerns they may have.

TWD: You’ve said TPP promotes U.S. values in Asia, including those related to labor, the environment and open access to the internet. How so?

Former Acting Deputy U.S. Trade Representative Wendy Cutler, left, appears at an Asia Society program in New York with former Australian Prime Minister and Asia Society Policy Institute President Kevin Rudd.

Cutler: These are areas where this agreement goes way beyond anything we’ve negotiated previously, including the U.S.-Korea Free Trade Agreement. Here what we tried to do is build on what we achieved in past free trade agreements to make sure that the labor obligations were subject to dispute settlement in line with other commercial disputes and also that new areas were added such as the need for countries to have a minimum wage, and the agreement by countries to create acceptable working conditions.

In the area of the environment, the agreement goes beyond the U.S.-Korea Free Trade Agreement. It gets into important areas of deforestation, overfishing and wildlife trafficking. These are really all pressing areas in the Asia-Pacific looking ahead. It addresses that and it also ensures that these obligations can be challenged under the enforcement procedures obtained in the TPP.

TWD: At one point there were significant gaps in the trade negotiations between the United States and Japan regarding access for U.S. automobiles in the Japanese market. Were those gaps closed? How? When Americans think of trade with Japan, they’re generally thinking electronics and cars, so this is obviously important from a domestic perspective.

Cutler:We had a number of challenges facing us in the auto negotiations. One was the staging of the elimination of U.S. tariffs for trucks and autos. We were very far away on that issue a year ago. We were able to achieve long staging for both trucks and cars and the reason why this is so important is that the non-tariff measures that we succeeded in eliminating in Japan, those provisions will go into effect right away so our car companies will have the opportunity to sell more in the Japanese market before the U.S. tariffs start to come down.

TWD: You’ve expressed hope that more nations can join the agreement. Is that realistic?

Cutler: During the negotiations a lot of countries were brought into the TPP, most recently Canada, Mexico and Japan. The agreement includes what are called accession provisions, which allow the entry of new countries. The agreement was always envisioned to be an open platform agreement so more countries were always envisioned joining the TPP. Since the agreement has been completed, a number of countries, including Korea, Indonesia and the Philippines, have expressed interest. Other countries like China have said they are studying the agreement very closely now. There seems to be a growing interest and over time there will need to be consultations with the existing members — all 12 members — to see if those countries are indeed interested and ready to join, which means agreeing to live up to the high standards of the TPP.

TWD: Marc Perrone, president of the 1.3 million-member United Food and Commercial Workers International Union, has strongly criticized the TPP, saying it will push Americans into an unfair competition with workers in Vietnam who make less than a dollar per hour. He says the result will be a race to the bottom where corporations either lower wages or send jobs overseas. What is your response to that?

Cutler: I think this agreement has the highest standards in the labor area that we’ve ever had in a trade agreement. That’s been coupled with these action plans we’ve concluded with Vietnam and a couple of other countries…. I’m optimistic that over time we’ll see a great improvement in Vietnam’s labor standards, and in addition, I would note that in the action plan with Vietnam there is a provision that basically ties the U.S.-Vietnam market access gains with Vietnam’s implementation of its obligations under the agreement.

TWD: Domestic critics of the deal also say it will force the U.S. to accept more seafood and meat imports from countries like Malaysia, whose food safety standards are notoriously lax. Does this deal compromise food safety for America or other nations?

Cutler: There is nothing in the TPP that would require the U.S. or any country to lower their food standards. In fact, what TPP is about is ensuring that food standards are set at high levels and that any restrictions on food imports are made in accordance with science and not just people’s feelings about food. I think those concerns are really unfounded.

TWD: Let’s talk about President Obama’s highly touted pledge at the outset of his second term to pivot America’s foreign policy focus from the Middle East to Asia. Critics contend that the pivot hasn’t really happened either because of ongoing adverse circumstances in the Middle East or because it was just hollow rhetoric. What is your take on the pivot?

Cutler: I like to call the pivot ‘rebalancing’ and I really believe it has happened and it’s happened on a number of fronts. We’ve been so much more engaged with Asia under this administration. I can’t even begin to count the number of trips this president has taken to Asia and it’s not like he’s just going to the APEC meeting and coming home. When he goes, he’s going to a number of countries and he’s doing a lot of outreach to different segments of the population.

I think as a result of our policies on economics and on the strategic geopolitical and military front, we’ve developed a much closer relationship with Asia. And I think the TPP is a real cornerstone of this rebalancing policy. I think it’s so important as our economic ties really strengthen with these countries that … greater stability will be promoted among these countries, so I’m optimistic that the TPP will be passed and it will really contribute to strengthening ties between the U.S. and Asia.

Now that we’re in the post-TPP world, we want to work with other countries in Asia to figure out the best way to integrate our economies in the Asia Pacific looking at TPP and the other initiatives going forward and really finding common ground between them. A lot of people now are talking about conflicts between TPP and RCEP [Regional Comprehensive Economic Partnership, with the Association of Southeast Asian Nations], and I don’t really see these different initiatives as rivals or as competing initiatives. I think they are all complementary and leading toward trade liberalization. I hope that we … can take a fresh look at all of these issues.

TWD: You led the negotiations on the U.S. Korea Free Trade Agreement. In the two years that this landmark agreement has been in effect, South Korea has become the sixth-largest trading partner of the United States, exports of U.S. manufactured goods to Korea have increased, Koreans are buying more U.S. services than ever and U.S. exports of a wide range of agricultural products have seen significant gains. The agreement has also improved Korea’s investment environment through strong provisions on intellectual property rights, services and investment, supporting U.S. exports. Do you view all of that as a harbinger of good things to come under the TPP?

Cutler: A lot of people were very, very concerned about our negotiations with Korea and what this would mean for trade. In reality, we’ve seen the outcome has been win-win. Our exports have grown exponentially. That may have slowed down at certain points during the three-year implementation phase, but that’s really coincided with the slowdown in the Korean economy, where we’ve seen exports to Korea from non-FTA countries slowing at a much quicker pace. Also, since the FTA, our relationship with Korea has strengthened on all fronts. We’re very close partners. I would say that as a result of these free trade agreements, we’ve developed closer relations with these countries that really carry over to many different aspects of our relationship.

About the Author

Michael Coleman (@michaelcoleman) is a contributing writer for The Washington Diplomat